The meeting, held at House Speaker Nancy Pelosi's office, includes House Financial Services Chairman Barney Frank, Senator Majority Leader Harry Reid, other Senate and House leaders from both political parties and Securities and Exchange Commission Chairman Christopher Cox. The Bush administration wants to make sure Congress is behind the idea before it moves ahead on the plan, Steve Liesman reports.

"What we are working on now is an approach to deal with the systemic risk and stresses in our capital markets," Paulson tells reporters.

The plans include the creation of a giant facility to buy mortgage-backed securities; the price tag may be as high as $500 billion.

The US Treasury plans to re-create the Resolution Trust Corporation, Charlie Gasparino reports. The RTC was created in 1989 amid the savings and loan crisis to liquidate assets of those institutions.

"This will bring real trust back into the market," Donald Marron, chairman of Lightyear Capital, told CNBC. "It would free up real, spendable capital in these organizations. They can use that to make loans, to make transactions and to build confidence in the system. This is a confidence crisis."

The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage

Central banks around the world announce they will buttress money markets by infusing billions in cash. The Federal reserve says it will authorize a $180 billion expansion of temporary foreign currency swap arrangements.

Ahead of the Securities & Exchange Commission's ban on naked shorting, which goes into effect Friday, Calpers (the California Public Employees Retirement System) says it will no longer loan out shares of banker-brokers Goldman Sachs and Morgan Stanley to short sellers. Across the Atlantic, Britain's Financial Services Authority bans all short selling in financial stocks until Jan. 16, 2009.

The Dow Jones Industrial Average surges more than 200 points as trading heads into the final hour; analysts cite the RTC concept and anti-short bans, which sent bank stocks soaring.

AIG is to be removed from the Dow 30 blue-chip index on Sept. 22 and replaced by Kraft Foods.